ETHAN ALLEN INTERIORS INC
For the period ended Jun 30, 2026. Filed Sep 3, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Sep 3, 2026
ETD$20.07-3.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2025-06-30; filed 2025-08-22.
0001437749-25-027594
Item 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2026-06-30; filed 2026-09-03.
0001437749-26-029578
Item 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 111 previous paragraphs and 114 current paragraphs.
62 unchanged; 35 reworded; 15 added; 14 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 21 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
*Foundation:*Ethan Allen is rooted in our core values of quality, craftsmanship and personal service—values that have enabled us to navigate many economic and housing cycles. Through constant reinvention, including the evolution from a wholesale dealer business to a retail network, we have remained profitable each year since going public in 1993 and have built a differentiated enterprise supported by strong margins, disciplined management and consistent cash dividends. Vertically integrated from retail to manufacturing to logistics, we continue to craft 75% of our furniture in eleven North American manufacturing plants, supporting jobs, strengthening our supply chain and investing in quality.
Current report
We remain debt-free with substantial liquidity and a robust balance sheet to support long-term growth. We generated $52.5 million in operating cash flow during fiscal 2026, which helped grow our total cash and investments to $187.5 million at June 30, 2026. We continued our history of returning capital to shareholders by paying four regular quarterly cash dividends of $0.39 per share and a special cash dividend of $0.25 per share, bringing the total amount of dividends paid to $46.3 million during fiscal 2026. As part of our capital allocation strategy, we also repurchased 250,000 shares of Company stock for $4.8 million during fiscal 2026. Inventory levels totaled $148.5 million at June 30, 2026, an increase of 5.4% since last year as new product introductions combined with price increases drove higher levels of on-hand inventory but improved in-stock inventory positions. Customer deposits from undelivered written orders totaled $62.7 million at June 30, 2026, down from $75.1 million a year ago as delivered sales outpaced incoming retail written orders. Our wholesale backlog was $44.3 million at June 30, 2026, a decrease of 9.3% due to a slowdown in orders and improved customer lead times.
Current report
Consolidated net sales decreased $35.2 million or 5.7% in fiscal 2026 compared to the prior year due to lower contract sales, a decline in delivered unit volume and less available backlog from fewer incoming orders. The decline in consolidated net sales was partially offset by a higher average ticket price, new product introductions and incremental designer floor sample sales.
Current report
Retail net sales decreased $11.9 million or 2.3% in fiscal 2026 compared to the prior year due to lower delivered unit volumes and fewer written orders partially offset by increased designer floor sample sales and a higher average ticket price. Higher designer floor sample sales were driven by selling off discontinued floor product to make room for the new product launches that debuted in retail design centers during fiscal 2026. Sales in the U.S. were down 2.4% while sales from our Canadian design centers increased 2.3%.
Current report
Retail written orders declined 6.1% year over year due to lower demand and design center traffic combined with broader macroeconomic uncertainty including a stagnant housing market, elevated interest rates and global unrest. At June 30, 2026, there were 141 Company-operated design centers, including four new locations opened during fiscal 2026 within Colorado Springs, Concord (Canada), San Diego and Vancouver.
Current report
Consolidated gross profit decreased $17.4 million or 4.7% in fiscal 2026 compared with the prior year due to lower consolidated net sales, the impact of incremental tariffs, lower clearance sale margins and higher manufacturing input costs partially offset by a change in sales mix, a higher average ticket price, lower headcount and reduced financing costs. Included within our fiscal 2026 consolidated gross profit was the recovery of $5.0 million in previously paid tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). These refunds reflect claims we submitted through the U.S. CBP refund system and represent substantially all of our previously paid IEEPA tariffs. Wholesale gross profit decreased 16.2% due to incremental tariffs, lower contract sales, a reduction in delivered unit volume and higher manufacturing input costs partially offset by lower in-bound freight and employee compensation. Retail gross profit decreased 4.6% primarily due to lowered delivered unit volume, lower clearance sale margins and a reduction in premier home delivery revenue partially offset a higher average ticket price and lower headcount.
Current report
Consolidated gross margin was 61.2%, a 70-basis point improvement over the prior year primarily due to a change in sales mix, lower in-bound freight costs, reduced headcount and a higher average ticket price. Our sales mix, which represents the percentage of retail sales compared to total consolidated sales, increased to 88.2% in fiscal 2026, up from 85.1% in the prior year due to lower contract sales. These benefits were partially offset by incremental tariffs, lower clearance sales margins, and deleveraging from fewer delivered sales. Wholesale gross margin decreased 310 basis points compared to the prior year due to incremental tariffs, lower contract sales and unfavorable manufacturing variances from lower production and higher input costs. Our retail gross margin decreased 120 basis points due to lower clearance sale margins and less premier home delivery revenue partially offset by a higher average ticket price from selective price increases and reduced financing costs.
Current report
Our consolidated advertising expenses during fiscal 2026 totaled $19.5 million, or 3.4% of consolidated net sales in fiscal 2026, up from 2.9% in the prior year. The increased marketing spend was driven by investments across digital channels, including paid search and paid social as well as higher direct mail and trade campaign costs, to support customer acquisition, client engagement and retention. Our marketing investments are disciplined and multi-faceted, with continued focus on enhancing an omni-channel strategy, including our digital footprint, with the goal of strengthening brand awareness and positioning, and creating a more seamless connection between online engagement and in-design-center client experiences.
Current report
Consolidated general and administrative expenses during fiscal 2026 were up 0.8% compared to the prior year primarily due to higher occupancy and employee benefit costs partially offset by lower headcount. Wholesale general and administrative expenses were 0.7% higher than a year ago due to higher employee benefit costs partially offset by lower incremental incentive compensation and costs to support our contract business. Retail general and administrative expenses increased by 0.8% from incremental occupancy costs associated with newly added design centers partially offset by reduced headcount. Compared to a year ago, our consolidated headcount is down 4.6%, including 4.6% lower at Wholesale and 4.8% less at Retail.
Current report
Restructuring and other charges, net of gains during fiscal 2026 totaled $1.1 million compared with $0.3 million in the prior year. Included in the current year was $1.5 million from early lease termination fees associated with the closing of two retail design centers during fiscal 2026.
Current report
Consolidated operating income** **for fiscal 2026 was $45.0 million compared with $62.0 million last year. As a percentage of consolidated net sales, consolidated operating income for fiscal 2026 was 7.8%, compared with 10.1% in the prior year. Adjusted operating income was $46.7 million, or 8.1% of net sales compared with $62.9 million, or 10.2% of net sales in the prior year. Reduced operating income during fiscal 2026 was primarily driven by lower contract sales, incremental tariffs, additional marketing spend, delivering out increased promotional activity and higher employee benefit costs partially offset by a higher average retail ticket price, lower variable costs and reduced headcount.
Current report
Wholesale operating income for fiscal 2026 was $28.6 million compared with $47.0 million in the prior year. As a percentage of wholesale net sales, wholesale operating income was 8.7% compared with 13.1% in the prior year. The decrease in wholesale operating income and related operated margin was primarily from the decrease in contract sales and incremental tariffs. Based on current operating levels, we estimate our annual tariff exposure to be approximately $15.0 million.
Current report
Retail operating income for fiscal 2026 was $6.7 million compared with $19.8 million in the prior year. As a percentage of retail net sales, retail operating income for fiscal 2026 was 1.3% compared with 3.8% in the prior year. The decrease in retail operating income and related operating margin was due to lower retail net sales, a decrease in retail gross margin and higher occupancy costs partially offset by reduced variable costs from lower net sales and less headcount.
Current report
During fiscal 2026, we generated $52.5 million in net cash provided by operating activities, primarily attributable to net income, adjusted for non-cash items, and insurance recoveries partially offset by unfavorable working capital changes. Our fiscal 2026 operating cash flow of $52.5 million was lower than $61.7 million generated in the prior year due to lower net income and incremental restructuring payments partially offset by $2.2 million in insurance recoveries. Restructuring payments made during fiscal 2026 of $4.0 million were primarily for cleanup of damage caused from the Beecher Falls fire, retail lease exit costs, employee severance and other restructuring matters. Working capital changes during fiscal 2026 were from increased inventory carrying levels along with a reduction in customer deposits. Higher levels of on-hand inventory reflect new product introductions combined with price increases.
Current report
Capital Expenditures. Capital expenditures during fiscal 2026 totaled $11.0 million compared with $11.3 million in the prior year. Current year capital expenditures were primarily for new retail design centers and remodels, reconstruction of our Beecher Falls outbuilding, additional manufacturing equipment and investments in technology. Four new Company-operated design centers located in Colorado Springs, Concord (Canada), San Diego and Vancouver were opened during fiscal 2026. We expect capital expenditures to be in the range of $12 million to $14 million for fiscal 2027, with continued spending on new design centers and manufacturing-related investments.
Removed paragraphs (14)
Previous report
The home furnishings industry has been challenged by lower consumer confidence, a weak housing market and uncertainty surrounding global trade policies including tariffs. Despite these challenges, our robust balance sheet and financial stability provide a solid foundation. We are confident in the strength of our vertically integrated business model as we have successfully navigated challenging times over the course of Ethan Allen’s 93-year history and we will continue to serve our clients and deliver value to our shareholders.
Previous report
Refer to theRegulation G Reconciliation of Non-GAAP Financial Measures section within this MD&A for the reconciliation of U.S. generally accepted accounting principles (“GAAP”) to adjusted key financial metrics.
Previous report
Consolidated net sales in fiscal 2025 decreased $31.6 million or 4.9% compared to the prior year due to lower delivered unit volume, reduced available backlog, less design center traffic and fewer contract sales partially offset by higher average ticket prices. A stagnant housing market, inflationary pressure and cautious consumer spending due to economic uncertainty contributed to lower demand levels and related sales. A higher average ticket price was driven by fewer designer floor sample sales and selective price increases.
Previous report
Retail net sales from Company-operated design centers decreased 3.2% during fiscal 2025 compared to the prior year primarily from reduced delivered unit volumes, lower written orders, less available backlog, lower designer floor sample sales and decreased premier home delivery revenue partially offset by an increase in average ticket price. Sales in the U.S. were down 2.7% while sales from our Canadian design centers decreased 20.8%.
Previous report
Retail written orders declined 1.5% year over year due to lower consumer confidence, a weak housing market and uncertainty about trade tariffs. However, during the just completed fourth quarter, Retail written orders rose by 1.6%, driven by the strength of new product introductions, increased promotional activity, elevated clearance and improved consumer sentiment from the pause of additional tariffs. At June 30, 2025, there were 142 Company-operated design centers with new design centers in Middleton, WI, Toronto, Canada, Watchung, NJ and Peoria, AZ.
Previous report
Consolidated gross profit in fiscal 2025 decreased $20.9 million or 5.3% compared with the prior year due primarily from the 4.9% decline in consolidated net sales, increased promotional levels and higher financing costs from increased usage of our Ethan Allen private label platinum card. These declines were partially offset by lower input costs, including raw material and freight, an increase in average ticket price, lower designer floor sample sales and reduced headcount which helped keep our consolidated gross margin comparable with last year. Wholesale gross profit decreased 1.2% due to the 3.2% decline in sales partially offset by a 70-basis point gross margin improvement. Retail gross profit decreased 3.8% due to the 3.2% decrease in net shipments combined with a 30-basis point reduction in gross margin.
Previous report
Consolidated gross margin was 60.5%, a 30-basis point decline over the prior year due to lower unit volume sales and higher financing costs partially offset by a change in sales mix, lower raw material and freight input costs, reduced headcount, fewer designer floor sample sales and selective price increases which contributed to a higher average ticket price. Retail sales, when expressed as a percentage of total consolidated net sales, were 85.1% in fiscal 2025, up from 83.6% in the prior year period, which had a positive impact on our consolidated gross margin. Wholesale gross margin was up 70 basis points over the prior year due to lower raw material and fuel input costs, reduced headcount and investments in technology, which helped streamline production workflows. These benefits were partially offset by reduced production volumes from lower incoming written orders, which led to increased plant inefficiencies and higher manufacturing variances. Our retail gross margin decreased 30 basis points compared to the prior year due to higher financing costs and increased promotional levels partially offset by higher average ticket price and a decline in sales of designer floor samples.
Previous report
Consolidated general and administrative (“G&A”) expenses increased 1.0% during fiscal 2025. Wholesale G&A rose 7.1% due to higher employee benefit costs, incremental incentive compensation and additional investments in corporate technology. Retail G&A expenses were down 0.9% due to reduced headcount and elevated prior year design center refresh costs.
Previous report
Restructuring and other charges, net of gains for fiscal 2025 was a charge of $0.3 million and related primarily to severance and other charges. Included within other charges was $0.1 million from a recent fire within our Vermont sawmill. The temporary disruption caused by the June 2025 fire did not have a material impact on our operations as the facility resumed operations by early July. Losses incurred were from the disposal of damaged inventory, inoperable equipment from fire damage, facility cleanup and restoration and we are working through insurance to recover a portion of our losses incurred. The prior year gain of $0.1 million related to a $2.6 million gain related to the amortization of the deferred liability generated from the sale-leaseback transaction completed on August 1, 2022 partially offset by $2.2 million in net losses from the July 2023 Vermont flood and $0.4 million in severance and other charges.
Previous report
Consolidated operating income** **for fiscal 2025 decreased $16.0 million or 20.5%. Adjusted operating income was $62.9 million, or 10.2% of net sales compared with $77.9 million, or 12.1% of net sales in the prior year. The primary driver of reduced operating income was lower consolidated net sales partially offset by lower SG&A expenses. We remain focused on a disciplined approach to cost savings and expense control in a challenging environment, which helped mitigate the impact of reduced consolidated net sales.
Previous report
Wholesale operating income for fiscal 2025 was $47.0 million or 13.1% of net sales, compared to $48.7 million or 13.1% in the prior year. The decrease in wholesale operating income was driven by the $12.0 million decline in wholesale net sales partially offset by a 70-basis point increase in gross margin combined with higher restructuring charges in the prior year related to the Vermont flood.
Previous report
Retail operating income for fiscal 2025 was $19.8 million or 3.8% of retail net sales, compared to $24.7 million or 4.6% in the prior year. The decrease in operating income was driven primarily by the $17.4 million reduction in retail net sales combined with a 30-basis point drop in gross margin partially offset by a decline in SG&A expenses.
Previous report
Cash provided by operating activities in fiscal 2025 was primarily attributable to net income, adjusted for non-cash items, partially offset by changes in working capital. We generated $61.7 million in cash from operating activities during fiscal 2025 compared with $80.2 million in the prior year. This decrease was due to lower net income and changes in working capital. Changes in working capital reflect an increase in prepaid expenses and a decline in accounts payable, primarily due to timing of payments. Restructuring payments made during fiscal 2025 of $0.6 million related primarily to severance while payments of $1.0 million in the prior year included $0.6 million related to the Vermont flood restoration efforts.
Previous report
Capital Expenditures. Capital expenditures during fiscal 2025 totaled $11.3 million compared with $9.6 million in the prior year. Current year capital expenditures related primarily to the further expansion of our manufacturing facilities in Mexico, new retail design centers, investments in technology, and remodeling costs associated with our hotel. During fiscal 2025, we further strengthened our vertically integrated enterprise through the purchase of property, plant and equipment for $1.6 million, which increased our manufacturing operations in Silao, Mexico. New design centers in Middleton, WI, Toronto, Canada, Watchung, NJ, and Peoria, AZ were opened during fiscal 2025 that showcase our unique style while combining complimentary interior design services with technology.
Reworded paragraphs (35)
Previous wording
Ethan Allen design centers represent a mix of locations operated by independent licensees and Company-operated locations. At June 30, 2025, the Company operates 142 retail design centers, 137 located in the U.S. and five in Canada. Our independently operated design centers are located in the U.S., Asia, the Middle East and Europe. During fiscal 2025, we opened four new design centers in Middleton, WI, Toronto, Canada, Peoria, AZ and Watchung, NJ that showcase our unique vision of American style while combining complimentary interior design services with technology.
Current wording
Ethan Allen design centers represent a mix of locations operated by independent licensees and Company-operated locations. At June 30, 2026, the Company operates 141 retail design centers, 136 located in the U.S. and five in Canada. Our independently operated design centers are located in the U.S., Asia, the Middle East and Europe. During fiscal 2026, we opened four new Company-operated design centers in Colorado Springs, Concord (Canada), San Diego and Vancouver.
Previous wording
We also own and operate eleven manufacturing facilities, including four manufacturing plants, one sawmill, one rough mill and a kiln dry lumberyard in the U.S., three upholstery manufacturing plants in Mexico and one case goods manufacturing plant in Honduras. Approximately 75% of our furniture is manufactured in our North American plants. In addition, we contract with various suppliers located in Europe, Asia and other various countries to import products that support our business.
Current wording
We also own and operate eleven manufacturing facilities, including four manufacturing plants, one sawmill, one rough mill and a kiln dry lumberyard in the U.S., three upholstery manufacturing plants in Mexico and one case goods manufacturing plant in Honduras. Approximately 75% of our furniture is manufactured in our North American plants. We also contract with various suppliers located in Europe, Asia and other countries to import products.
Previous wording
We executed well throughout the fiscal year as the Company remained focused on five key areas: talent, service, marketing, technology and social responsibility. These areas of focus along with our interior design professionals combining personal service with technology contributed to Ethan Allen recently being named America’s #1 Premium Retailer byNewsweek, for the third year in a row. Our strategic initiatives to further strengthen our talent, introduce new products, run strong marketing campaigns, invest in our North American manufacturing, and maintain our logistics network throughout North America has positioned us well.
Current wording
Ethan Allen focuses on the key areas of talent, service, marketing, technology and social responsibility. Our initiatives to introduce new products, run strong marketing campaigns, invest in our North American manufacturing, and maintain our logistics network throughout North America has positioned us well for sustained profitability and returning value to shareholders.
Previous wording
*Business Model.*Our vertical integration is a competitive advantage for us. Our North American manufacturing and logistics operations are an integral part of an overall strategy to maximize production efficiencies and maintain this competitive advantage. Our business model is to maintain continued focus on (i) providing relevant product offerings, (ii) capitalizing on the professional and personal service offered to our customers by our interior design professionals, (iii) leveraging the benefits of our vertical integration including a manufacturing presence in North America, (iv) investing in new technologies across key aspects of our vertically integrated business, (v) maintaining a strong logistics network, (vi) communicating our messages with strong marketing campaigns, and (vii) utilizing our website, ethanallen.com, as a key marketing tool to drive traffic to our retail design centers. We aim to position Ethan Allen as a premier interior design destination and a preferred brand offering products of superior style, quality, and value to customers with a comprehensive, one-stop shopping solution for their home furnishing and interior design needs. We seek to constantly reinvent our projection and product offerings through a broad selection of products, designed to complement one another, reflecting current fashion trends in home furnishing.
Current wording
*Business Model.*Our vertical integration is a competitive advantage for us. Our North American manufacturing and logistics operations are an integral part of an overall strategy to maximize production efficiencies and maintain this competitive advantage. Our business model is to focus on providing relevant product offerings, capitalizing on the personal service offered to our clients by our interior design professionals, leveraging the benefits of our vertical integration including a manufacturing presence in North America, investing in new technologies across our business, maintaining a strong logistics network, communicating our messages with strong marketing campaigns, and utilizing an omni-channel approach via our website, ethanallen.com. We aim to position Ethan Allen as the premier interior design destination and a preferred brand offering products of superior style, quality, and value to clients with a comprehensive, one-stop shopping solution for their home furnishing and interior design needs. We seek to constantly reinvent our projection and product offerings through a broad selection of products, designed to complement one another, reflecting current fashion trends in home furnishing.
Previous wording
*Talent.*At June 30, 2025, our employee count totaled 3,211, with 2,239 employees in our wholesale segment and 972 in our retail segment. Our employee count decreased 5.7% or 193 associates during fiscal 2025, with 56 fewer employees in retail and 137 fewer employees in wholesale. We were pleased to strengthen our teams during fiscal 2025 while at the same time reducing headcount through operational efficiencies.
Current wording
*Talent.*At June 30, 2026, our employee count totaled 3,062, with 2,137 employees in our wholesale segment and 925 in our retail segment. Our employee count decreased 4.6% or 149 associates during fiscal 2026, with 47 fewer employees in retail and 102 fewer employees in wholesale. We continually look for opportunities to strengthen our teams while at the same time optimizing headcount through operational efficiencies.
Previous wording
Fiscal 2025 Financial Year in Review* (1). *Our financial performance during fiscal 2025 was highlighted by strong margins, positive operating cash flow and a robust balance sheet despite operating in a challenging environment. We generated strong operating cash flow of $61.7 million, which helped us grow our cash, cash equivalents and investments total to $196.2 million at June 30, 2025. We continued our history of returning capital to shareholders by paying four regular cash dividends of $0.39 and declared a special cash dividend of $0.40 per share, bringing the total amount of dividends paid to $50.1 million during fiscal 2025. Consolidated net sales of $614.6 million were down 4.9% compared to the prior year due to lower delivered unit volume, reduced available backlog, less design center traffic and fewer contract sales partially offset by higher average ticket prices. We ended the fiscal year with wholesale backlog of $48.9 million, down 8.7% from a year ago due to lower contract volume and improved customer lead times. Our consolidated gross margin of 60.5% was comparable to 60.8% in the prior year as benefits from a change in sales mix, lower input costs, reduced headcount, fewer designer floor sample sales and selective price increases were offset by lower unit volume sales, increased promotional activity and higher financing costs. Our adjusted operating margin was 10.2% compared to 12.1% in the prior year primarily due to deleveraging from lower unit sales partially offset by disciplined cost management and gross margin preservation. Adjusted diluted earnings per share of $2.04 was down from $2.49 in the prior year.
Current wording
Fiscal 2026 Financial Year in Review* (1). *Our financial performance during fiscal 2026 was highlighted by strong margins, positive operating cash flow and strong cash dividends supported by a robust balance sheet despite operating in a challenging macroeconomic environment. We were able to improve operating efficiency and run a leaner enterprise despite a reduction in our contract business and sluggish demand. Consolidated net sales of $579.5 million were down 5.7% compared to the prior year due to lower contract sales, a decline in delivered unit volume and fewer incoming orders which led to lower available backlog partially offset by a higher average ticket price. Our consolidated gross margin of 61.2% was higher than 60.5% in the prior year due to a change in sales mix, lower in-bound freight costs, reduced headcount and a higher average ticket price. Our operating margin was 7.8% compared to 10.1% in the prior year primarily due to deleveraging from lower consolidated net sales and higher tariffs partially offset by disciplined cost management and retail price increases. Diluted earnings per share of $1.56 was lower than $2.01 in the prior year due to fewer net sales and the impact of tariffs.
Previous wording
Wholesale net sales in fiscal 2025 decreased 3.2% compared to the prior year primarily due to a decline in contract sales partially offset by an increase in intersegment sales to our Company-operated design centers. Excluding intersegment sales to our retail segment, wholesale net sales decreased $14.2 million or 13.4% compared to the prior year period. Our contract sales, including shipments to the GSA, decreased 23.7% due to less incoming orders as a result of the slowdown in government spending, which led to lower available backlog. Our international sales, which represented 1.4% of total wholesale net sales in fiscal 2025, decreased 27.6% from lower net sales to China.
Current wording
Wholesale net sales decreased $28.4 million or 7.9% in fiscal 2026 compared to the prior year primarily due to a decline in contract sales and sales to both our intersegment Company-operated design centers and independent U.S. retail network. Excluding intersegment sales to our retail segment, wholesale net sales decreased $23.2 million compared to the prior year. Our contract sales, including shipments to the GSA, decreased 56.0% primarily due to fewer incoming orders from the change in presidential administration in 2025 combined with the U.S. government shutdown, beginning in October 2025. Our wholesale international sales, which represented 0.9% of total wholesale net sales in fiscal 2026, decreased 43.6% primarily from reduced order volumes with China.
Previous wording
Wholesale written orders, which represent orders booked through all of our channels, were down 3.2% in fiscal 2025 compared to the prior year driven primarily from the decline in our contract business. Contract orders were down 25.4% while our international retailers decreased 17.9%. However, orders from intersegment Company-operated design centers and our independent U.S. retail network were relatively flat compared to prior year as demand patterns began to show signs of improvement during the just completed fourth quarter. Wholesale backlog was $48.9 million at June 30, 2025, down 8.7% from a year ago due to lower contract volume and improved customer lead times. The number of weeks of wholesale backlog at June 30, 2025 was 7.0 weeks, down from 7.3 weeks a year ago.
Current wording
Wholesale written orders, which represent orders booked through all of our channels, were down 11.2% in fiscal 2026 compared to the prior year due to declines across all channels as macroeconomic uncertainty combined with lower traffic created near-term pressure. Contract orders were down 49.5% while our international retailers, including China, decreased 52.0%. However, during the just completed fourth quarter of fiscal 2026, incoming order volume from our contract business improved, increasing by 14.8% compared with a year ago. Orders from intersegment Company-operated design centers declined 6.5% and our independent U.S. retail network declined 7.4% during fiscal 2026. Wholesale backlog was $44.3 million at June 30, 2026, down 9.3% from a year ago due to lower contract and international business. Lower backlog levels led to improved customer lead times, including lowering the number of weeks of wholesale backlog compared with a year ago.
Previous wording
SG&A expenses** **for fiscal 2025 decreased $5.4 million or 1.7% compared to the prior year. When expressed as a percentage of sales, SG&A expenses were 50.4%, an increase from 48.8% in the prior year primarily due to fixed cost deleveraging from lower delivered sales. SG&A expenses were down 1.7% while consolidated sales decreased 4.9%, which led to a decrease in operating leverage.
Current wording
SG&A expenses** **decreased $1.1 million or 0.4% in fiscal 2026 compared to the prior year primarily due to reduced variable expenses, strong cost control and lower headcount partially offset by incremental marketing and digital costs. When expressed as a percentage of sales, SG&A expenses were 53.3%, an increase from 50.4% in the prior year due to fixed cost deleveraging from lower delivered sales.
Previous wording
Consolidated selling expenses were down 3.6% during fiscal 2025. Wholesale selling expenses, which include our logistics operation, decreased 0.1% from a 9.8% decline in wholesale units shipped, lower freight costs including fuel, and less outgoing distribution costs combined with reduced headcount partially offset by an increase in advertising expenses and digital and web-technology spend. Retail selling expenses were down 4.8% due to reduced delivery costs from lower delivered revenue, less headcount and lower designer variable compensation from lower retail sales. Consolidated advertising expenses were equal to 2.9% of net sales, up from 2.5% in the prior year due to increased digital media spend, including paid social campaigns and a higher volume of digital magazine mailings.
Current wording
Consolidated selling expenses were down 1.3% during fiscal 2026. Wholesale selling expenses, which include our logistics operation, decreased 3.4% from a decline in distribution volume, reduced outbound freight and lower headcount partially offset by an increase in advertising expenses and digital and web-technology spend. Retail selling expenses were down 0.6% due to reduced delivery costs and designer variable compensation from lower delivered volume and less headcount partially offset by an increase in advertising expenses.
Previous wording
Interest and other income, net includes interest income on investments, foreign currency gains or losses and other income (expense) incurred outside our normal course of business. Interest and other income, net decreased 5.5% to $7.3 million during fiscal 2025 due to foreign currency losses reflecting greater volatility in exchange rates, including a weaker U.S. dollar partially offset by an additional $0.1 million in interest income on our investments.
Current wording
Interest and other income, net includes interest income on investments, foreign currency gains or losses and other income (expense) incurred outside our normal course of business. Interest and other income, net increased 15.3% due to a contract termination fee received during the first quarter of fiscal 2026 from our former private label credit card provider. This income was partially offset by lower interest income from reduced available investments and lower interest rates.
Previous wording
Income tax expense for fiscal 2025 decreased $4.2 million or 19.4% compared with the prior year due to the $16.4 million decrease in income before income taxes. Our effective tax rate was 25.2% compared with 25.3% in the prior year. Our effective tax rate of 25.2% varies from the 21% federal statutory rate primarily due to state taxes.
Current wording
Income tax expense for fiscal 2026 decreased $4.1 million or 23.7% compared with the prior year due to the $15.8 million or 23.0% decrease in income before income taxes. Our effective tax rate for fiscal 2026 was 25.0% compared with 25.2% in the prior year. Our fiscal 2026 effective tax rate of 25.0% varies from the 21% federal statutory rate primarily due to state taxes.
Previous wording
Net income for fiscal 2025 was $51.6 million compared with $63.8 million in the prior year period. Adjusted net income was $52.3 million, a decrease of 18.0% compared with $63.8 million in the prior year period. The decrease in net income was driven by the $31.6 million reduction in consolidated net sales partially offset by lower SG&A expenses.
Current wording
Net income in fiscal 2026 was $39.9 million compared with $51.6 million in the prior year. Adjusted net income was $41.1 million, a decrease of 21.4% compared with $52.3 million in the prior year. The decrease in net income was driven by the $35.2 million reduction in consolidated net sales partially offset by improved consolidated gross margin and lower SG&A expenses.
Previous wording
Diluted EPS for fiscal 2025 was $2.01 compared to $2.49 per diluted share in the prior year period. Adjusted diluted EPS was $2.04, down 18.1% compared with the prior year period. The decrease in diluted EPS was primarily due to lower consolidated net sales partially offset by lower SG&A expenses.
Current wording
Diluted EPS for fiscal 2026 was $1.56 compared to $2.01 per diluted share in the prior year. Adjusted diluted EPS was $1.61, down 21.1% compared with the prior year primarily due to deleveraging from lower delivered net sales partially offset by improved consolidated gross margin and lower SG&A expenses.
Previous wording
The following tables below show a reconciliation of non-GAAP financial measures used in this filing to the most directly comparable GAAP financial measures.
Current wording
The following tables below provide a reconciliation of non-GAAP financial measures used in this filing to the most directly comparable GAAP financial measures.
Previous wording
Our sources of liquidity include cash and cash equivalents, short-term and long-term investments, cash generated from operations and amounts available under our credit facility. We believe these sources remain adequate to meet our short-term requirements and contractual obligations and fulfill other cash requirements for day-to-day operations for at least the next twelve months, as well as to meet long-term liquidity requirements and contractual obligations, finance our long-term growth plans and invest in capital expenditures for the foreseeable future. We are committed to maintaining a strong balance sheet and monitoring our liquidity closely.
Current wording
Our sources of liquidity include cash and cash equivalents, short-term and long-term investments, cash generated from operations and amounts available under our credit facility. We believe these sources remain adequate to meet our short-term requirements and contractual obligations and fulfill other cash requirements for day-to-day operations for at least the next twelve months, as well as to meet long-term liquidity requirements and contractual obligations, finance our long-term growth plans, invest in capital expenditures and pay dividends for the foreseeable future. We are committed to monitoring our liquidity.
Previous wording
The following table illustrates the main components of our available liquidity (in thousands).
Current wording
The following table illustrates the main components of our available liquidity.
Previous wording
At June 30, 2025, we had working capital of $157.1 million compared with $179.0 million at June 30, 2024 and a current ratio of 2.03 at June 30, 2025, comparable to 2.16 a year ago. Our non-U.S. subsidiaries held $3.6 million in cash and cash equivalents at June 30, 2025, which we have determined to be permanently reinvested.
Current wording
At both June 30, 2026 and 2025, we had working capital of $157.1 million and a current ratio of 2.06 at June 30, 2026, comparable to 2.03 a year ago. Our non-U.S. subsidiaries held $6.4 million in cash and cash equivalents at June 30, 2026, which we have determined to be permanently reinvested.
Previous wording
At June 30, 2025, we held cash and cash equivalents of $76.2 million compared with $69.7 million at June 30, 2024. Cash and cash equivalents aggregated to 10.3% of our total assets at June 30, 2025, compared with 9.4% a year ago. In addition to cash and cash equivalents of $76.2 million, we had aggregated investments of $120.0 million at June 30, 2025 compared with $126.1 million at June 30, 2024. Our investments at June 30, 2025 are within U.S. Treasury bills and notes, which we expect will further enhance our returns on excess cash. Our U.S. Treasury bills with maturities of less than one year totaled $60.0 million while our U.S. Treasury notes with maturities ranging between one and two years totaled $60.0 million. We believe our cash, cash equivalents and investments are available to meet short-term liquidity needs.
Current wording
In addition to cash and cash equivalents of $73.6 million, we had aggregated investments of $113.9 million at June 30, 2026 compared with $120.0 million at June 30, 2025. Our investments at June 30, 2026 are within U.S. Treasury bills and notes, which we expect will further enhance our returns on excess cash. Our U.S. Treasury bills with maturities of less than one year totaled $59.6 million while our U.S. Treasury notes with maturities ranging between one and two years totaled $54.2 million.
Previous wording
Our cash, cash equivalents and restricted cash increased $6.7 million or 9.6% during fiscal 2025 due to $61.7 million in net cash provided by operating activities and $8.9 million of proceeds from sales of investments, net of purchases, partially offset by $50.1 million in cash dividends paid, capital expenditures of $11.3 million and $2.2 million in taxes paid related to net share settlement of vested equity awards.
Current wording
Our cash, cash equivalents and restricted cash decreased $3.3 million during fiscal 2026 primarily due to $46.3 million in cash dividends paid, capital expenditures of $11.0 million and share repurchases of $4.8 million partially offset by $52.5 million in net cash provided by operating activities and $5.0 million of proceeds from sales of investments, net of purchases.
Previous wording
Cash used in investing activities was $2.4 million during fiscal 2025, compared with $20.0 million in the prior year. During fiscal 2025, we had $8.9 million of proceeds from sales of investments, net of purchases, which represented $94.1 million of U.S. Treasuries that matured during the fiscal year of which $85.2 million was reinvested. The prior year included an outgoing $10.4 million of net purchases of investments, which related to $124.5 million of U.S. treasuries that matured during the year and were subsequently reinvested at a higher amount of $134.9 million. Capital expenditures during fiscal 2025 were $11.3 million compared with $9.6 million in the prior year as we further expanded our manufacturing facilities in Mexico, remodeled our hotel, built-out new retail design centers and continued to invest in new manufacturing equipment and technology.
Current wording
Cash used in investing activities was $2.8 million during fiscal 2026, compared with $2.4 million in the prior year. During fiscal 2026, we had $5.0 million of net proceeds received from sales of investments, which related to $59.8 million of U.S. Treasuries that matured and were subsequently reinvested for $54.8 million. In the prior year, we had $8.9 million of net proceeds received from sales of investments, which related to $94.1 million of U.S. Treasuries that matured during the year and the subsequent reinvestment of $85.2 million. Capital expenditures during fiscal 2026 were $11.0 million compared with $11.3 million in the prior year. Our cash used in investing activities during fiscal 2026 of $2.8 million was net of $3.2 million in insurance proceeds received, including $1.2 related to the reconstruction of an outbuilding at our Beecher Falls sawmill and $2.0 million for the reimbursement of a flood-damaged retail design center.
Previous wording
Cash used in financing activities was $52.6 million during fiscal 2025 compared with $52.3 million in the prior year. Total dividends paid were $50.1 million, a decrease of 0.4% from a year ago due to a reduction in the special cash dividend paid, which went from $0.50 per share last year to $0.40 in the current year. The decrease in our special cash dividend was offset by an 8.3% increase in our regular quarterly dividend, which rose from $0.36 to $0.39 per share, effective May 2024. In addition, during fiscal 2025, a total of 70,495 shares valued at $2.2 million were repurchased from employees to satisfy their withholding tax obligations upon vesting of equity awards. This compared to $2.1 million repurchased for similar withholding tax obligations in the prior year period.
Current wording
Cash used in financing activities was $53.3 million during fiscal 2026 compared with $52.6 million in the prior year. Total dividends paid were $46.3 million, a decrease from $50.1 million paid a year ago due to the reduction in the special cash dividend paid, which went from $0.40 per share last year to $0.25 per share in fiscal 2026. We repurchased 250,000 shares under our existing share repurchase program during fiscal 2026 at an average price of $19.22 per share for a total cash outflow of $4.8 million. In addition, during fiscal 2026, a total of 62,267 shares valued at $1.8 million were repurchased from employees to satisfy their withholding tax obligations upon vesting of stock-based awards. This compared to $2.2 million repurchased for similar withholding tax obligations in the prior year.
Previous wording
We present restricted cash as a component of total cash and cash equivalents on our consolidated statements of cash flows and withinOther assets on our consolidated balance sheets. At June 30, 2025 we held $0.8 million of restricted cash related to the Ethan Allen insurance captive compared to $0.5 million in the prior year.
Current wording
We present restricted cash as a component of total cash and cash equivalents on our consolidated statements of cash flows and withinOther assets on our consolidated balance sheets. At June 30, 2026 we did not have any restricted cash compared with $0.8 million in the prior year, which related to the Ethan Allen insurance captive.
Previous wording
Due to changes in exchange rates, our cash and cash equivalents were impacted by less than $0.1 million during fiscal 2025 compared with $0.3 million in the prior year period. These changes had an immaterial impact on our cash balances held in Canada, Mexico and Honduras.
Current wording
Due to changes in foreign currency exchange rates, namely the Mexican Peso, Canadian Dollar and Honduran Lempira against the U.S. Dollar, our cash and cash equivalents were impacted by $0.3 million during fiscal 2026 compared with less than $0.1 million in the prior year. These changes had an immaterial impact on our cash balances held in Mexico, Canada and Honduras.
Previous wording
Capital Needs. On January 26, 2022, we entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent and syndication agent and Capital One, National Association, as documentation agent. The Credit Agreement amended and restated the Second Amended and Restated Credit Agreement, dated as of December 21, 2018, as amended. The Credit Agreement provides for a $125 million revolving credit facility (the “Facility”), subject to borrowing base availability, with a maturity date of January 26, 2027. The Credit Agreement also provides us with an option to increase the size of the Facility up to an additional amount of $60 million. Availability under the Facility fluctuates according to a borrowing base calculated on eligible accounts receivable and inventory, net of customer deposits and reserves. The Facility includes covenants that apply under certain circumstances, including a fixed-charge coverage ratio requirement that applies when excess availability under the credit line is less than certain thresholds. As of June 30, 2025, we were not subject to the fixed-charge coverage ratio requirement, had no borrowings outstanding under the Facility, were in compliance with all other covenants, and had borrowing availability of $121.0 million of the $125.0 million credit commitment. See Note 12,Credit Agreement, to the consolidated financial statements included under Item 8 of this Annual Report on Form 10-K, for a further description of the Credit Agreement.
Current wording
Capital Needs. On January 26, 2022, we entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent and syndication agent and Capital One, National Association, as documentation agent. The Credit Agreement amended and restated the Second Amended and Restated Credit Agreement, dated as of December 21, 2018, as amended. The Credit Agreement provides for a $125 million revolving credit facility (the “Facility”), subject to borrowing base availability, with a maturity date of January 26, 2027. The Credit Agreement also provides us with an option to increase the size of the Facility up to an additional amount of $60 million. Availability under the Facility fluctuates according to a borrowing base calculated on eligible accounts receivable and inventory, net of customer deposits and reserves. The Facility includes covenants that apply under certain circumstances, including a fixed-charge coverage ratio requirement that applies when excess availability under the credit line is less than certain thresholds. As of June 30, 2026, we were not subject to the fixed-charge coverage ratio requirement, had no borrowings outstanding under the Facility, were in compliance with all other covenants, and had borrowing availability of $121.2 million of the $125.0 million credit commitment. See Note 12,Credit Agreement, to the consolidated financial statements included under Item 8 of this Annual Report on Form 10-K, for a further description of the Credit Agreement.
Previous wording
Letters of Credit***.***** **At both June 30, 2025 and 2024 there were $4.0 million of standby letters of credit outstanding under the Facility.
Current wording
Letters of Credit***.***** **At June 30, 2026 we held $3.8 million in standby letters of credit outstanding under the Facility compared to $4.0 million in the prior year.
Previous wording
During fiscal 2025 we paid a total of $1.96 per share in cash dividends for an aggregate total of $50.1 million. This included the special dividend paid on August 29, 2024 totaling $10.2 million. In the prior year period, total dividends paid were $50.3 million. With our dividends, we have returned $721.3 million to shareholders since our initial public offering in 1993.
Current wording
During fiscal 2026 we paid a total of $1.81 per share in cash dividends, for an aggregate total of $46.3 million. This included the special dividend of $6.4 million paid on August 28, 2025. In the prior year, total dividends paid were $50.1 million, including a special cash dividend of $10.2 million. We have returned $767.6 million to shareholders since our initial public offering in 1993. Payment of regular quarterly cash dividends plus special dividends reflect our confidence in cash generation, our debt-free balance sheet and long-term strategy, and reinforces the Board’s focus on delivering value to all shareholders.
Previous wording
We have paid a special cash dividend each of the past five years and paid an annual cash dividend every year since 1996. Although we expect to continue to declare and pay quarterly cash dividends for the foreseeable future, the payment of future cash dividends is within the discretion of our Board and will depend on our earnings, operations, financial condition, capital requirements and general business outlook, among other factors. Our credit agreement also includes covenants with certain limitations on our ability to pay dividends.
Current wording
We have paid a special cash dividend each of the past five years and paid an annual cash dividend every year since 1996. Although we expect to continue to declare and pay quarterly cash dividends for the foreseeable future, the payment of future cash dividends (whether quarterly, special or otherwise) is within the discretion of our Board and will depend on our earnings, operations, financial condition, capital requirements and general business outlook, among other factors. Our credit agreement also includes covenants with certain limitations on our ability to pay dividends.
Previous wording
Share Repurchase Program.*** ***There were no share repurchases under our existing multi-year share repurchase program during fiscal 2025 or 2024. At June 30, 2025, we had a remaining Board authorization to repurchase 2,007,364 shares of our common stock pursuant to our share repurchase program. The timing and amount of any future share repurchases in the open market and through privately negotiated transactions will be determined by the Company’s officers at their discretion and based on a number of factors, including an evaluation of market and economic conditions while also maintaining financial flexibility.
Current wording
Share Repurchase Program.*** ***We repurchased 250,000 shares under our existing multi-year share repurchase program at an average price of $19.22 per share during fiscal 2026. There were no share repurchases under the program in fiscal 2025. At June 30, 2026, we had a remaining Board authorization to repurchase 1,757,364 shares of our common stock pursuant to our share repurchase program. The timing and amount of any future share repurchases in the open market and through privately negotiated transactions will be determined by the Company’s officers at their discretion and based on a number of factors, including an evaluation of market and economic conditions while also maintaining financial flexibility.
Previous wording
Fluctuations in our operating results, levels of inventory on hand, operating lease commitments, the degree of success of our accounts receivable collection efforts, the timing of tax and other material payments, the rate of written orders and net sales, levels of customer deposits on hand, as well as capital expenditures will impact our liquidity and cash flows in future periods. The effect of our contractual obligations on our liquidity and capital resources in future periods should be considered in conjunction with the factors mentioned here. At June 30, 2025, we had total contractual obligations of $182.8 million, down from $197.9 million a year ago primarily due to lower retail design center lease obligations and timing of purchase orders for the procurement of finished goods and raw materials.
Current wording
Fluctuations in our operating results, levels of inventory, operating lease commitments, the degree of success of our accounts receivable collection efforts, the timing of tax and other material payments, the rate of written orders and net sales, levels of customer deposits, as well as capital expenditures will impact our liquidity and cash flows in future periods. The effect of our contractual obligations on our liquidity and capital resources in future periods should be considered in conjunction with the factors mentioned here. At June 30, 2026, we had total contractual obligations of $183.1 million, comparable to $182.8 million a year ago.
Previous wording
Product Warranties***.***At both June 30, 2025 and 2024, our product warranty liability totaled $1.0 million. Our products, including case goods, upholstery and home accents, generally carry explicit product warranties and are provided based on terms that are generally accepted in the industry. All our domestic independent retailers are required to enter into and perform in accordance with the terms and conditions of a warranty service agreement. We record provisions for estimated warranty and other related costs at time of sale based on historical warranty loss experience and make periodic adjustments to those provisions to reflect actual experience.
Current wording
Product Warranties***.***At June 30, 2026 our product warranty liability totaled $0.8 million compared to $1.0 million in the prior year. Our products, including case goods, upholstery and home accents, generally carry explicit product warranties and are provided based on terms that are generally accepted in the industry. All our domestic independent retailers are required to enter into and perform in accordance with the terms and conditions of a warranty service agreement. We record provisions for estimated warranty and other related costs at time of sale based on historical warranty loss experience and make periodic adjustments to those provisions to reflect actual experience.
Previous wording
Inventories (finished goods, work in process and raw materials) are stated at the lower of cost, determined on a first-in, first-out basis, and net realizable value. Cost is determined based solely on those charges incurred in the acquisition and production of the related inventory (i.e. material, labor and manufacturing overhead costs). At June 30, 2025 our inventory reserves totaled $1.5 million, which we estimate for excess quantities and obsolete items based on specific identification and historical write-downs, taking into account future demand and market conditions. Our inventory reserves contain uncertainties that require management to make assumptions and to apply judgment regarding a number of factors, including market conditions, the selling environment, historical results and current inventory trends. We adjust our inventory reserves for net realizable value and obsolescence based on trends, aging reports, specific identification and estimates of future retail sales prices. If actual demand or market conditions change from our prior estimates, we adjust our inventory reserves accordingly throughout the period. We have not made any material changes to our assumptions included in the calculations of the lower of cost or net realizable value reserves during the periods presented. Our inventory reserves of $1.5 million at June 30, 2025 were down from $1.8 million a year ago primarily due to a decline in our inventory carrying levels combined with fewer returns and obsolete items.
Current wording
Inventories (finished goods, work in process and raw materials) are stated at the lower of cost, determined on a first-in, first-out basis, and net realizable value. Cost is determined based solely on those charges incurred in the acquisition and production of the related inventory (i.e. material, labor and manufacturing overhead costs). At June 30, 2026 our inventory reserves totaled $1.5 million, which we estimate for excess quantities and obsolete items based on specific identification and historical write-downs, taking into account future demand and market conditions. Our inventory reserves contain uncertainties that require management to make assumptions and to apply judgment regarding a number of factors, including market conditions, the selling environment, historical results and current inventory trends. We adjust our inventory reserves for net realizable value and obsolescence based on trends, aging reports, specific identification and estimates of future retail sales prices. If actual demand or market conditions change from our prior estimates, we adjust our inventory reserves accordingly throughout the period. We have not made any material changes to our assumptions included in the calculations of the lower of cost or net realizable value reserves during the periods presented.
Previous wording
We are subject to income taxes in the U.S. and other foreign jurisdictions. Our effective tax rate for fiscal 2025 was 25.2% compared with 25.3% in the prior year. Our tax provision is an estimate based on our understanding of laws in Federal, state and foreign tax jurisdictions. These laws can be complicated and are difficult to apply to any business, including ours. The tax laws also require us to allocate our taxable income to many jurisdictions based on subjective allocation methodologies and information collection processes. Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.
Current wording
We are subject to income taxes in the U.S. and other foreign jurisdictions. Our effective tax rate for fiscal 2026 was 25.0% compared with 25.2% in the prior year. Our tax provision is an estimate based on our understanding of laws in Federal, State and Foreign tax jurisdictions. These laws can be complicated and are difficult to apply to any business, including ours. The tax laws also require us to allocate our taxable income to many jurisdictions based on subjective allocation methodologies and information collection processes. Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.
Previous wording
The Company evaluates, on a quarterly basis, uncertain tax positions taken or expected to be taken on tax returns for recognition, measurement, presentation, and disclosure in its financial statements. If an income tax position exceeds a 50% probability of success upon tax audit, based solely on the technical merits of the position, the Company recognizes an income tax benefit in its financial statements. The tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The liability associated with an unrecognized tax benefit is classified as a long-term liability except for the amount for which a cash payment is expected to be made or tax positions settled within one year. As of June 30, 2025, we had gross unrecognized tax benefits totaling $3.9 million, consistent with the year ago period.
Current wording
The Company evaluates, on a quarterly basis, uncertain tax positions taken or expected to be taken on tax returns for recognition, measurement, presentation, and disclosure in its financial statements. If an income tax position exceeds a 50% probability of success upon tax audit, based solely on the technical merits of the position, the Company recognizes an income tax benefit in its financial statements. The tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The liability associated with an unrecognized tax benefit is classified as a long-term liability except for the amount for which a cash payment is expected to be made or tax positions settled within one year. As of June 30, 2026, we had gross unrecognized tax benefits totaling $3.8 million, down from $3.9 million in the year ago period.
Previous wording
We have insurance programs in place for workers’ compensation and healthcare under certain employee benefit plans provided by the Company. The programs, which are funded through self-insured retention, are subject to stop-loss limitations. We accrue estimated losses using actuarial models and assumptions based on historical loss experience. At June 30, 2025, we recorded a liability of $1.5 million for incurred but not reported healthcare claims and $4.5 million related to workers’ compensation claims. These business insurance reserves are recorded withinAccrued compensation and benefits on our consolidated balance sheets. Although we believe that the reserves are adequate, the estimates are based on historical experience, which may not be indicative of current and future losses. In addition, the actuarial calculations used to estimate reserves are based on numerous assumptions, some of which are subjective. We adjust insurance reserves, as needed, in the event that future loss experience differs from historical loss patterns.
Current wording
We have insurance programs in place for workers’ compensation and healthcare under certain employee benefit plans provided by the Company. The programs, which are funded through self-insured retention, are subject to stop-loss limitations. We accrue estimated losses using actuarial models and assumptions based on historical loss experience. At June 30, 2026, we recorded a liability of $1.5 million for incurred but not reported healthcare claims and $5.0 million related to workers’ compensation claims. These business insurance reserves are recorded withinAccrued compensation and benefits on our consolidated balance sheets. Although we believe that the reserves are adequate, the estimates are based on historical experience, which may not be indicative of current and future losses. In addition, the actuarial calculations used to estimate reserves are based on numerous assumptions, some of which are subjective. We adjust insurance reserves, as needed, in the event that future loss experience differs from historical loss patterns.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
At June 30, 2026, we held cash and cash equivalents of $73.6 million compared with $76.2 million at June 30, 2025. Cash and cash equivalents aggregated to 10.2% of our total assets at June 30, 2026, compared with 10.3% a year ago.
Current report — wording carried from elsewhere
We believe our cash, cash equivalents and investments are available to meet short-term liquidity needs.